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tv   Squawk on the Street  CNBC  December 11, 2012 9:00am-12:00pm EST

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election about private equity. i'm just wondering if you sat there just taking it, or decided to -- >> i think private equity is a very good and high return class asset over time. i like what blue harbor is doing, because we're avoiding paying the premiums. >> capitalism itself can be brutal. and private equity is another way the capital system works. >> absolutely. >> i agree with that. >> we're all trying to save everybody. cliff robbins, thank you for being here. join us tomorrow, "squawk on the street" begins right now. a government fractured, a market paralyzed, a call to action. as our nation careens to the fiscal cliff. cnbc's challenge to lawmakers to rise above partisan politics, seem compromise and find the solution. the clock is ticking down. the stakes are getting higher. now, we are turning up the pressure. this is a cnbc special report,
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"mission critical: rise above d.c." >> welcome back to our continuing coverage, mission critical: rise above d.c. we've been here all morning long. while we've been here on capitol hill, we've been talking to lawmakers about rising above gridlock and reaching a real deal on the fiscal cliff. in the last hour we sat down with grover norquist saying no one should strike a bad deal, and that there is no better reason to raise taxes now than there was in the past. he also added he thinks house speaker boehner has been a good leader during the fiscal cliff negotiations. and then we were joined by bob corker and bob conrad. corker said we need to focus more on entitlements now, and he will not sign any package that doesn't deal with entitlements at this point. conrad said more, not less, should be included in some sort of a big deal. by big deal, he means over $4 trillion.
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we are now just 20 days away from the fiscal cliff deadline. we continue to bring both sides of the aisle to sit down together. congressman sander levin is a ranking member of the house ways and means committee. and a republican from new jersey, the vice chairman of the house budget committee and a member of the house financial services committee. gentlemen, thank you both for being here. >> thank you. >> we just sat down with senators conrad and corker. they seem to agree on a lot of areas. one of those areas is they think we need to negotiate up from this point, not down from this point and cut some sort of a deal that is 4 trillion or greater when you add up the tax increases. congressman levin, would you agree with that, going up not down? >> no, i think we should go up. the question is, when. my view is, first things first. we have to pass the middle class tax cut. that's half of the potential impact of the cliff.
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half. then what we need to do is reach a decision and not renew the upper income tax cuts. that's $1 trillion over ten years. we have to make sure we pass unemployment insurance. i brought a chart here, and it shows the impact middle class tax cut has the most in terms of impact on the financial cliff. ui is next, unemployment insurance. because when people receive it, they spend it. and 2 million people, if we don't act january 1, their federal benefits, all of a sudden, it's gone. also, the physician reimbursement has to be handled. and also, the -- >> don't forget -- >> don't forget a & t. if we postpone it and go into next year, it's chaos. first steps first. i think we need to do the entitlement issue, but we can't
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do it all at once. if we try to do it all at once, i'm afraid we go over the cliff. and we should not do that. >> right. congressman garrett, i know you're committed to an issue that says that spending is a problem, not revenues. >> there you go. >> our state has been hit by a storm that may be worse than hurricane andrew. it requires spending. do you veto that spending on principle? >> at this point in time, we just got the president's proposal as to the 60 some odd billion dollars. the governor said they're looking for more. that's just coming over to the house and senate to take a look at those numbers. i think in those numbers, i think it's appropriate for congress to look at them, to also look for what i was asking for, that we never got with katrina, and that was some degree of accountability. you remember all the stories about the fema trailers, about the credit, debit cards, whatever they were at that time, given out to people across the country, even if they were not
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in those areas. i think the american public wants to make sure there is a that level of accountability going into this sort of thing. but you raise a good point, we're at $239 billion in deficit, i think the first couple months of this year and they're talking about adding $60 billion on top of that. >> i'm trying to figure out what kind of spending is good and what kind of spending is bad. we're all spending. we know there are a lot of people in congress who are committed to cutting spending. but when you ask them about it, as we have this morning, they've got different -- they pledge their constituency to not increase taxes. they want to cut spending. but if new jersey doesn't get that spend, even if it's a little bit wasteful for heaven's sakes, we're really going to be hurt. >> one person's stimulus is another person's wasteful spending. the president talked time and time again, aside from the issue of the katrina spending, or sandy spending, the president has spoken time and time again, we need additional stimulus of spending. we saw how well that has worked out the last couple of times,
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$700 billion, $800 billion spent and not producing any jobs. that's the problem. when the government spends money, and a lot of these other infrastructure investments and stimulus, it takes from the private sector, not creating jobs. if the government is able to spend this money better than a private sector, i have a problem with that. >> i just came from michigan. there's been a resurgence of the auto industry. there was federal money that went into it. without federal money, chrysler and gm would have gone bust. >> the liquidity. like aig -- >> exactly. let me finish. you talk about it's all wasted. that's not true. that's not true. some of it is well spent. and i think you should answer your question. sandy, not named after me, had a major impact on the east coast. there's been a request for help from the federal government. i'm all in favor of
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accountability. >> but did you have accountability with katrina? i don't think so. it's your constituents that are paying for the wasteful money. if you're coming here telling your constituents, you really don't -- >> no, look, i'm saying, i'm in favor of accountability. >> the congressman from new jersey needs to speak up for the state. >> i'm in favor of accountability. let me finish. after accountability is built in, will you vote yes or no? >> i will be supportive of slaks once we have the accountability in place. >> good. >> work with me on the accountability, fantastic. >> absolutely. i'll make sure the people in new jersey and new york are not left high and drive. because it's a national issue. when there's an emergency, we just don't all say, everybody on their own. which is often your theory. no, everybody in this country isn't always on their own. we are a national community. and when there's a tragedy, when
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there's some kind of event in new jersey, new york, we all have a responsibility, accountability. don't use that as a dodge for saying, let's act. the auto industry would have been on its -- just destroyed. >> about 1.5 million jobs, i might add. >> absolutely. and we had accountability there. >> let me get a word in here. i know you want to dominate the conversation -- >> no, i want you to get to the point. >> we now agree there should be additional language in the legislation to have accountability. that is a great point. so far there wasn't that accountability when you voted in the past on a bailout to states in this area. it's good that we moved that point. i look forward to working with you to provide that accountability. >> there was accountability in terms of help for gm and chrysler. >> and aig. >> there was accountability. and people like -- >> you were investing in aig
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when the government was doing at that time? >> aig was saved. that was really important. >> were you personally investing in it? >> i'm at a 48% tax rate. >> no, when the government was bailing out aig, were you personally encourage your viewers to buy aig at that point in time or saying, now is not the time? >> i was recommending aig. i thought it was a good deal after the stock became public again. >> no, no -- >> there was nothing to trade. >> if the government does such a great job in these bailouts, maybe we should have the government be involved in all these things, like solyndra and all the rest. >> a lot of people are in shelters. >> do you believe the government does a better job of picking winners and losers in the private sector? >> when there's a loser, we have, like when there's a storm
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like sandy, losers, we have to step up to the plate. let's get back to the main issue. the main issue, that is the cliff. >> but you said first things first and you want to see the tax increases before you go along with spending cuts, that is a nonstarter with the other side of the aisle. >> let me finish. >> no, you always want to finish. let me just say this. >> are you for the middle class tax cuts? >> there is no middle class tax cut. no high income tax cut. the tax rates do not go down. we have current tax rates here. if we pass this bill jointly, the tax rates stay here. no one is suggesting that the tax rates for the middle class go up. let's get the term -- >> oh, oh, you don't -- >> up or down? >> no, i'm saying -- >> they go up. >> everybody agreed to that.
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i don't know why. >> don't mislead the viewers. you said that you want a middle class tax consult. no one is suggesting that the taxes go down. so you're misleading the viewers when you say there's a possibility of -- >> if we don't act, the taxes go up. >> that's not what you were saying a moment ago. what we're all suggesting is tax rates should not go up on anyone. i'm quoting president obama when he was senator obama, bad economic times is not the time to raise taxes on anyone. then why are we raising taxes -- >> the people are for it. we should extend the middle class tax cut and not the -- >> i don't want to be rude, but congressman garrett from new jersey and congressman from new jersey. >> thank you for being here. >> this mission continues. we've got much more from capitol hill. this morning, at 10:00, senator mark warner, and 11:00 a.m.
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former white house chief of staff, i remember when he was working in the private sector. now it's time for my co-anchor to come in. >> jim, i can't tell if you're having fun down there or not. you tweeted this morning that -- >> you call this fun? >> yeah. >> i'll tell you one thing, guys, listening to that conversation, a few minutes before the opening bell, front page of the "washington post," investors aren't waiting for a deal. they're selling stock, they're trying to sell homes. they're setting up shelters, gifts for taxes. this discussion is not academic by any stretch of the imagination. >> we have to avoid the cliff, period. >> yes, we do. >> we do. to your point, carl, $20 billion in special dividends have been paid out this quarter. some of the economists said this would be a jump of income in the household, payouts to dividends,
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acceleration into this year. >> becky and jim, who have been doing amazing work on capitol hill, did talk to grover norquist, a bit of a rematch after cramer's appearance a couple of weeks ago with grover norquist. >> obama personally moved it out two years, because he didn't want to raise taxes and damage the economy, because he said the economy was weak. the economy's not strong now. so the argument to raise taxes now is not any better than it was two years ago. i think there's a real danger we could end up with some damaging tax increases, and nothing to show for it. >> jim, quick reaction to that exchange between you and grover? >> there was a lot of positives here. grover wants to put cameras in the room. when i cover the florida legislature, how many years ago was that, they put cameras in the room. you know what happened, a lot of people started making a lot of sense. so i think that grover makes some good points, because you
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wouldn't get this kind of rancor. >> jim, good to have you down there. we need you down there today. we want to draw your attention to the screen here. david and melissa was halted for news pending. and here is some news. >> this goes back, of course, if you recall, liberty owned a stake in expedia. trip adviser was spun off from expedia. but they also still held a stake there. i have to look in a bit more, but there have always been a lot of goings on between mr. malone and mr. diller in terms of their various ownership stakes in these companies. >> in the meantime, futures coming off of a four-day win streak off the dow. that's not happened since the middle of october or so. s&p riding to the upside, just barely. nfib, big collapse in small business optimism in this country. german confidence, positive for the first time since may.
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and the fed meeting begins, a two-day meeting with that press conference tomorrow. when we come back, goldman making a call on retail today with a number of buys. we'll tell you what's going on next. phil lebeau talks about virgin atlantic. and we'll talk aig. >> absolutely. >> one more look at futures. more "squawk on the street" in a minute. try running four.ning a restaurant is hard, fortunately we've got ink. it gives us 5x the rewards on our internet, phone charges and cable, plus at office supply stores. rewards we put right back into our business.
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the government's now planning to sell the remaining stake in the insurance giant. they'll be sold at $32.50 each, representing 16% of outstanding aig shares. the sale expected to total about $7.6 billion. treasury and federal reserve will exit the bailout with total profits of taxpayers for $22.7 billion. on $182 billion bailout, that is approximately a 12% return. >> not bad. before the show, we were saying treasury like everyone else, trying to get out before the capital gains go up. that's not really the case. the point is a good one, $22.7 billion. we have it broken down to a certain extent. over the last 19 months, the treasury has sold 1.66 billion
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shares of aig. once represented a 92% stake in the insurer. they've taken that down, as you see, the average price they got, now selling for 34 million shares. that will wrap it up for them. $1.66 billion, $31.18 a share, of course. it ends up being $22.7 billion. not for treasury as much as the federal reserve realizes a significant profit. particularly buying the damaged assets that were at aig's financial products unit. namely all the cds for the mortgage securities. that's where they made a lot of the money. you can see it right there, of course, $22.7 billion. a lot of shareholders saying we're going to get four-plus billion dollars announced yesterday, another $5 billion when we sell the remaining in aia as the lockup there. why not -- they could have been in a position to buy the stake back themselves, that being aig. the question for aig will be
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next year. what do you do with all your excess capital? what will the government, which still has a lot of sway here, allow you to do with your excess capital, amazingly enough people even considering buying something else. that will be a key question. not just for them, but gm also that has a large hold in the treasury. >> the stock is trading higher, jim, in the free market. this morning bernstein saying the offer was oversubscribed. and the last overhang on the stock is out of here. >> yeah, this is amazing. this was not a qualified aig. this is actually by the public. dave and i talked periodically about how the hedge funds like this stock. tim is an executive in t.a.r.p., okay? he was in charge of this sale. he said over and over again he would not break price, that aig would not lose money for the government, but more importantly he was not going to hurt the shareholders. my hat is off to him.
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i'm down in washington, all i ever hear about is the government shouldn't is a bunch of idiots, they don't know what they're doing. aig was fabulous. >> yeah. and on t.a.r.p., the government has recovered more than 90% of the $418 billion spent under t.a.r.p. so interesting stats for the tax paks out there. >> a . >> never would have thunk it four years ago. i think anybody, $182 billion sunk in, nobody ever would have expected to get it back, let alone make a profit. >> exactly. as you know, cramer's in washington, but he's still ready to help you capitalize on the markets. find out next in his mad dash. investors would love to get a lump of coal this year. which five top executives are most likely to be fired in 2013. we're going to answer that question. we'll look at the futures as we head into the tuesday morning open. mission critical open.
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by december 22nd for christmas delivery. he may be on the hill today, he may be in the middle of political discourse, but jim's eyes are never taken off the market. you're watching at&t this morning, what's up? >> i think the report that came out this morning is very significant. it says that at&t is selling more smartphones than we thought. smartphones, that's apple 4, which they actually mentioned the 4 is doing well u and iphone 5.
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carl, i just confessed, this market is about where we are right here, in the rotunda, and where apple is going. this is a bullish piece about apple. "fast money," other shows that maybe apple's not doing that well. you certainly wouldn't feel that way if the look at the at&t overweight by jpmorgan. >> we tried to debunk some of the debt cross thesis, it doesn't always work. >> no. remember, though, if you do have a big capital gain, you're stuck with the tax adviser who says, what are you doing worrying about the iphone 5, the iphone 4? nail it down. carl, it is encouraging to see that the actual substance, the technology may be winning. and this is a report that i did not expect. because it also means that at&t is -- the margins have to go down because they're subsidizing more apple phones than they thought. >> i don't know how you're going to do it. you're going to do this hour
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from the hill, come back and do mad tonight. i think there's a holiday party. >> you don't realize, it's an identical twin. i'm standing here going down to the holiday party at the white house. >> more energy than any mere mortal. when we come back, senator mark warner, democrat of virginia, part of our special day, the long focus on the fiscal cliff, rise above d.c., and the opening bell in just about four minutes. the
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so he can worry about other things, like what the market is doing and being ready, no matter what happens, which isn't rocket science. it's just common sense, from td ameritrade. . you're watching cnbc "squawk on the street." we're at the financial capital of the world, awaiting the opening bell to ring on this tuesday morning. there's certainly a lot to watch. we're seeing a big move in the euro. primarily the swiss franc raising deposit rates, which swiss franc deposits can be held. a gain in the euro. the first day of the two-day fed meeting, where it's widely anticipated the fed will embark on further stimulus action. >> it will be hard to say how expansionary that move is. if you're ben bernanke, why
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would you throw a curveball at this hour. we'll see. that press conference, a little more than 24 hours from now. >> we're continuing e inine ini more on trip adviser. look at the cnbc realtime exchange. we did see the features point to a higher open. here at the big board, coca-col coca-cola -- [ bell ringing ] >> and ringing the bell there. trip adviser, interesting deal, because the pricing at which the shares were bought. >> you've got to remember, of course, you have a change in voting control. it had been controlled by barry diller, it will now be controlled by liberty media. they will own 22% of the economics of trib adviser, but 57% of the total votes of the company, effectively controlling the company. so any thoughts you might have as a shareholder in erms it of the future takeover premium in
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terms of changing control. well, for now, don't expect them to go to the price that john malone and liberty are paying here. that's quite a price, $62.52 a share. we'll see what their stock does. we anticipate it will move up. but nowhere near the price he's paying in order to gain control of the company. barry diller, if you go back, of course, expedia, they split trip adviser, that was controlled by mr. diller. he had a voting agreement with liberty, which continues to own a significant stake in expedia. one interesting question mark i have here is why liberty did not exchange some of its sake in expedia for its stake in trip adviser. which would be tax efficient. tax efficiency drives much of the decision-making at that company. mr. diller said, i'm resigning as chairman of the board, but i'll still serve as a director as well. it's time for me, got a lot of
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other things going on. time for me to get this over to liberty. and allow the management team to continue to do the job they've been doing. >> shares of expedia are trading higher by 2.2% on this gain. >> yeah, third biggest gain on the s&p, expedia. big day for retail, jim. you've got urban at the top of the winner's list this morning saying that the fourth quarter's going to be high single digit. that's more than some thought. and earnings from dollar general. you've got goldman with their top picks initiating coverage, changing analysts, top pick coors and tume. calling the strength of disruptive retail. >> that piece was amazing. let's lump in trip adviser for a moment. there have been a lot of new companies, public companies, whether it be the coors, whether it be tomb, tumi, trip adviser,
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that people want to own. urban outfitters, why do people want to own that? these all have a growth at a time when growth is hard to come by. these are positive stories. i'm in the capital and everything that i'm hearing means the capital -- that consumer spending should be on the ropes next year. wow, are these stories ever not in sync with what's happening in the capital. >> yeah, goldman's also initiating, jim -- coach, excuse me, coach, as its only accelerated stock, saying there is competitor pressures. surprisingly though, jim, the shares are only down by a quarter of a percent. >> yeah, i think that when you see a broad move in retail, it will catch up later. i think that sometimes what happens is, if an analyst wants to show true mettle, they want something that has been touched. coach did right what was happening in the united states. the stock has been happening
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horribly, unlike some of the others. i think coach is not going to have the upswing that the other guys have. >> we're watching shares of apple as well. outperforming the markets. we haven't been able to say that in a few sessions, up by 1.5%. morgan stanley out with a note this morning, analysts having done a survey essentially saying interests in purchasing the apple td product is almost twice the initial interest in buying an iphone or ipad. and she says, success could mean $50 billion in revenue upside for apple. an interesting forecast, given we don't know what the product is. and we don't know the price at which it will be sold. >> well, i think that apple is so important for this market. rightly or wrongly. and if it can buck the trend, we have a couple of times bucked the trend, it does create a rosy view for all of the technology. texas instruments not blowing up last night. i know it sounds odd, isn't it
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great that a company didn't blow up. but tech has been a real anchor. if you could get that lifted and get the financials lifted, then you have quite a nice session brewing. >> jim, speaking of which, market's only been open for 4 1/2 minutes, and already the best gain of the month for the s&p, all month long, s&p only closed up 4.66. you've got to go to d.c. more often. >> look, it could be the reason. hey, look, can i just mention on this trip adviser. talk about a company that really resonates with users. linked in trip adviser, those are two ipos that actually have great business models. i don't blame anyone for taking a bigger stake in trip adviser. it works for the consumer. >> yeah, it's social media, plain and simple in terms of at least the travel area. and of course, as you point out, jim, it is a vote of confidence in trip adviser and what it's doing. and perhaps a bit with their decision to take down their
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stake over time in expedia. at least that's been the case thus far. we'll see how that stock performs. >> anyone who's used trip adviser, i've used it as a consumer, and also here in new jersey, it's make or break. trip adviser is very hard to -- let's just say you can't gain it. as soon as trip adviser sees something that is obviously chill, they get at it. if you have a review that seems target, you can go back to trip adviser and they'll pull it. it is a real service and real people around the world love it. >> we're watching shares of jpmorgan going higher. according to sources, the bank may ask regulators as early as january for permission to start buying back shares. that would be great for shareholders. the ceo/chairman said he would e in favor of returning returning shares to
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shareholders. we're seeing that react. >> return of capital is the key consideration in the financial services industry. we talked earlier about aig. and a lot of the capital that's going to be coming into that company. it has used -- last time the treasury sold, aig stepped up to buy a lot of that stock back. how much excess capital did these financial services companies need, whether it be insurers like aig, or a morgan stanley. and how effective is that in terms of buying back stock which is yet another question people have. >> it will be interesting, jim. as early as january we could see a lot of the financial firms file for at least permission to return capital in some way, shape or form, be it a dividend or buyback. >> some of them are really starting to brim with capital. i know that when you look at the group, as long as the federal reserve keeps interest rates flat, you get the net interest margin that investors are just not thrilled about. you're seeing that interest margin still being compressed.
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i think if you get a fiscal cliff deal, it will be mildly inflationary. that may actually raise rates, even if the fed keeps buying bonds. we actually need to see rates up in order to get real excited about the banks. >> that's a good point. we continue to watch facebook. flirting with 28. and apple here at $5.40. we'll see how it manages that resistance. bob pisani is on the floor with more. >> still talking about the fiscal cliff and how little reaction we'll get with the markets. up 60 points in the dow right now. there's no particular worry out there. they believe that a deal is going to happen. if you look at the vix, for example, not only are they not moving, they're not moving out of any range, but they're moving in an even tighter spread than they normally do. the relationship between vix and vix futures is squashed down. this is the deal, the
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republicans will agree to tax increases, and very quickly this week we'll turn to debate on what kind of spending cuts there's going to be, and dealing with entitlements. they believe a deal is coming, we'll see. i espoused this a couple of weeks ago, that the markets are going to sell off even with a deal on the fiscal cliff? why? because it represents the beginning of american austerity. higher taxes in the long run, spending cuts in the long run, that is a headwind for stocks. not a tailwind. i know everybody's excited about the deal being made. but a substantial minority believes that's a deal for the fed stocks. the general consensus down here, current purchases, $85 billion, is going to continue. instead of $45 billion from operation twist, operation twist goes away, and you go to outright purchases of treasuries. and you continue with that $40 billion in mortgage-backed
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security purchases. the $85 billion, they're doing right now, continues in a slightly different form. you guys, we're talking about aig. just two observations on aig. you'll notice here, it looks like to me they're not repurchasing any of their shares. they're dumping a huge amount of shares on the market. aig isn't actually buying it back. that's a signed of strength for the company. the other interesting thing is, the losses on sandy have been coming in recently. aig gave $2 billion in pre-tax losses. you include the taxes, after-tax, maybe 1.3, $1.4 billion in losses. that is imminently manageable. for all this disaster, and it was indeed a disaster, roughly $20 billion short losses, total in short losses for everyone has been imminently managed. if you think #$.3 billion, after tax losses for aig, they made $1.9 billion in profit in the last quarter. and they're going to have insured losses after taxes, $1.3
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billion. imminently manageable. have you noticed, by the way, that all the insurance companies are trading back where they were at the prices they were trading at prior to hurricane sandy. by the way, while we're on aig, for all those people who thought this was a bad idea for the government to get involved, aig's low was $5.53 march 9th, 2009. it is over $33 today. back to you. >> bob, thanks for that. rick santelli in chicago. good morning, rick. >> good morning, melissa lee. well, things have changed a bit today. just look at a 24-hour chart of ten-year yields. yes, they are up. we went from the doldrums, very tight range, close to $1.60, to this interday, that will break out 1.65. it is slightly over a two-week high on yields as you see on the chart going back to the third week in november. if we look at the boon, a fairly
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similar pattern, just kind of compressed a bit. it hasn't sold off as much, pushing the yield higher and the comp is only several days versus several weeks. remember, they had their german business confidence that really helped out a bit, as you can see from the next chart. look at the euro versus the dollar, indeed their data helped out in their meeting and getting into the beginning of our two-day meeting. maybe there's something going on there. remember, we're supposed to see a twist turn into a treasury purchase. you wouldn't really know it by looking at 10s and 30s, but most of that is most likely built in. nobody down here can see the fed withholding at this point based on fiscal cliff issues. look at the dollar/yen. the japanese has a boatload of issues, whether it's recession, or it's their deficit on trade growing. it has moderated just a bit. melissa lee and carl, back to you. >> and david, too.
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check out the latest moves in metals. >> carl, you know, traders here on the floor say a lot of their customers aren't willing to make any big bets here ahead of the fed meeting or with the fiscal cliff looming. and so many are seeing very, very light volumes here in terms of particularly gold trading, but energy trading as well. we have seen gold prices near the lows of the session. but this has been a very tight range here in today's trading session, only about an $8 range or so. all eyes are on the feds. when we're looking at gold prices right around 17.10 an ounce, we have to look at the energy market. there we're also seeing light volumes for this time of the morning. but we're also waiting to see what happens in vienna with the opec meeting. in addition to the fed that comes out tomorrow. the expectation is, that opec will leave their current quota unchanged, around 30 million barrels per day. the actual production, around 31 million barrels a day. there may not be any change to
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that. the key will be what happens in terms of the election of a new secretary-general and saudi arabia in the running for that as well. back to you. >> thanks very much, sharon epperson. i did want to look at shares of largest for-profit hospital in the country. a secondary offering this morning. hga finds itself in the of so many movements of the capital structure, reflective of the 250i78s. don't forget, they borrow at incredibly low rates not long ago, $1 billion, to pay a special dividend. you want to pay a special dividend prior to any tax increase on dividends as well. capital gains figuring into that debate, let's call it at this point that we've been detailing down in d.c. with our "mission critical" coverage. this morning, two of the owners of hca, it was a huge leverage back in '05, and '06, almost
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four times their money at this point, they take 32 million shares off the table. why now? you know why, their capital gains rate may go up, or will likely potentially will go up as well. that is pressuring hca stock as you see there. they take their ownership stake down, and they have a significant one. it levers itself back up to 4 1/2 times, and comes down and back up by continuing to pay special dividends to their owners. they start to sell their stake. we'll see whether consolidation comes to this industry as well. we'll keep an eye on that as that stock up at this point down by 2.5%, 3% this morning. >> david down here in the capital, it's very interesting that every republican, of course, think obama care is terrible. if you're a shareholder in aca, or want to be one, you should be
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applauding obama care. i think this is a deal you probably want to be in. >> yeah, it is interesting, the for-profit hospital companies have done quite well under the affordable care act. >> just a quick note, trip adviser open for trade, up by 11%. as you mentioned, david, not as high as liberty is paying for the shares. but it sa nice close -- >> a real vote of confidence from john malone who runs liber liberty. >> again, trip adviser up to 59.5 right now. delta airlines buying a stake in virgin atlantic. the most interesting aspect of the story is the wager between richard branson and willy walsh, let's say it's below the belt. we'll have the details coming up next. and richard anderson, plus a gadget lover's delight for the holidays. a live interview with the ceo of
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brookstone. bob, these projections... they're... optimistic.
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productivity up, costs down, time to market reduced... those are good things. upstairs, they will see fantasy. not fantasy... logistics. ups came in, analyzed our supply chain, inventory systems... ups? ups. not fantasy? who would have thought? i did. we did, bob. we did. got it.
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delta airlines announcing it is buying a 49% stake in virgin atlantic. hi, phil. >> this is rumored for some time, melissa, it was finally finalized this morning. here's the details behind the stake that delta is taking in virgin atlantic. cost $360 million. a little below what many people qur expecting. 49%, that's what delta's expecting of virgin atlantic. this is the important part. the virgin atlantic brand remains. it will not be converted over to the delta brand. this is all about increasing its exposure into the uk market, specifically the slots at heathrow. those remain the crown jewel in terms of the airline business going over to europe. if you have access to those slots, it's a much easier way to become profitable or increase your profits over in europe. by the way, there are 31 daily flights between the uk and north
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america. we'll find out exactly what happens in terms of frequent flier redemption possibilities between delta and virgin atlantic. remember, virgin atlantic is not part of any global alliance, not part of the sky team alliance, although many wonder if that's going to change with some time. take a look at shares of delta. richard anderson has had a nice little move here. some people would say, listen, this is all about jet fuel as it has moderated. there's something else at play here. we'll be talking with richard anderson about this at 11:40, first on cnbc. we'll talk to him after the press conference announcing this deal. you don't want to miss what he has to say. this is a ceo, and we've talked about it several times, who is trying to take the steps that will help delta grow in the future. you look at the alliances they're forming, gold in south america, and now with virgin atlantic. they're trying to position delta to have greater access globally for their business customers.
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that's the key here. >> yes. oil refining, they are thinking different, biphil for sure. phil lebeau in new york. willy walsh making a bet with richard branson that the virgin airlines brand will not be around in five years. branson offered to bet 1 million pounds, walsh reportedly said, i don't have a million pounds. a knee in the groin maybe. that's as painful to him as it might be to me. why can't our executives be that creative. >> that's so colorful. >> a ceo challenging another one like that in this country? >> it would be rare. >> it's rare. usually they control the company. that is typically -- they have large shareholders, they're never going to say something like that. >> they don't often mention body parts. >> only a guy could really appreciate that story. cramer's live in washington. six stocks in 60 seconds. if lawmakers do not agree on
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just tweeted at jim cramer, we'll start, jim, with ruckus. >> what a dispoilt. this thing went public recently. i say stay away. >> morgan stanley from sell to hold. >> this is a kind of a reverse housing play. i like this very much. >> laczar. >> this infrastructure trade is going to be very big if we continue to find more oil in this country. >> goldman up, neutral to buy. >> these medical device companies have been so bad. maybe it's finally right. >> analyst day. >> industrial stocks, they are still being like, you know, people say heck with the cliff. full speed ahead. >> goldman on deckers, uptrends appear weak.
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>> we know that they're weak. and that is why we think that they're going to make a bid for decker. >> jim, what's on mad tonight? >> sachs, you've got hurricane sandy, fiscal cliff, can they still make the numbers. by the way, if you go to see the tree, sachs, of course, the christmas tree in rockefeller center, i recommend everyone get to see the tree and see the saks. >> our special coverage of the fiscal cliff, mission critical rise above d.c. continues. democratic senator mark warner of virginia, one of the gang of eight, we'll hear what he has to say about a bipartisan solution to the cliff. that's coming up next. ♪ [ male announcer ] they are a glowing example of what it means to be the best. and at this special time of year, they shine even brighter.
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the president insists on my way or the highway. >> that is a bad strategy for america. it's a bad strategy for your businesses. and it is not a game that i will play. >> the fiscal cliff still looms. cnbc has called on lawmakers to rise above gridlock and reach a deal. now, we're beating down their
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doors. live from our nation's capitol, this is a cnbc special report. mission critical: rise above d.c. >> the mission continues. i'm becky quick, along with jim cramer. this is our special continuing coverage all day from capitol hill. mission critical, rise above d.c. we've had candid interviews with lawmakers all morning long. this is what we now know. senators bob corker and kent conrad agree more, not less needs to be included in the deal. conrad would like to see a whole lot more, he's calling this a big deal. something to the tune of $4 billion plus. also, congressman sander levin and garrett, they were here this morning. that's about the only thing they agreed on through the course of this. >> they agreed to sit together, quite an accomplishment. a sense of optimism on the hill this morning. the final points are still tripping up both sides. a democrat from virginia,
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directly involved in the talks, and is one of the gang of eight. senator, i'm thinking there was this movie when i was growing up, dr. strangelove. i'm thinking, after listening this morning, how i learned to stop worrying and love the fiscal cliff. is that where we are right now? >> you know, jim, this shouldn't be that hard. the idea that we've got to get a $4 trillio over ten years, with a mix of revenue increases, spending cuts. you know, when you look at the size of our economy, when you're looking at what's asked of people all across europe, uk, all in emerging nations, this is so small on a relative basis, that it's almost unamerican we're not going to be able to step up and get it done. you know, i'm optimistic that we're going to be able to avoid the fiscal cliff. we're not going to go over that, we're not going to see sequester, the challenge is going to be, is the deal going to be big enough, comprehensive enough that we take that minimum
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of $4 trillion off this $16 trillion debt over the next ten years. >> we're going to intervene, no matter what, in the trends of american business, meaning as soon as this one is over, we'll have a debt ceiling. because we can't get investment going in this country. that's why people keep leaving the market. >> you know, becky knows, everybody in business knows, if we could actually get a big deal done, that will do more nor job growth and economic stimulus than any single policy that the president or governor romney talked about during the campaign. this idea that we're going to lurch every 12 to 14 months, regardless of who would have been elected, romney or obama, i would have been in favor as a former governor of getting rid of this kind of debt ceiling poker that we play. >> i agree with that point. but senator, you also came up with a plan to decouple social security from this process, saying we need to look at these
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issues first, other issues later. we had senator corker here in the last hour and a half or so, his point was, he's not signing any deal that doesn't deal with both at the same time. i think as he put it, something like, you don't learn anything the second time the mule kicks you in the shins. he doesn't believe the cuts will come if he agrees to it now. >> becky, one of the things we've always said, even since simpson-bowles, is it would be a separate path. social security doesn't directly affect the debt and deficit. it is going bankrupt, depending on when the actuarials said between the late 2020s, early 2030s. i do agree with bob we've got to get it done. you confuse the issue when you mix it in the debt issue. there ought to be a separate process. you've got to have a vote, i would argue, when you have have a solution set for social security, it ought to be for 75 years solvency. then every ten years, come back and require congress to readjust it, so we don't continue to
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create these crises every 20, 30 years, because you can't predict what longevity is going to be. if you could do that, jim, we'd both be making a lot more money. but let's go ahead and do this on a regular readjustment basis. because all the entitlement programs are changing, because thank goodness we're living longer. >> now, do you think we could really get things going here if the president just said, okay, here's $500 million -- $500 billion that you cut out of medicare. we're going to negotiate with the drug companies, we're going to raise how much it costs to do medicare part b. the republicans that we hear from keep saying the same thing, until the president offers something, we can't get started. how about a little bit of an offer to get things rolling? >> if you go back to the gang of six, simpson-bowles, we had a whole menu of options that gets you in that range of savings. now, part of this, when you get into the baselines, one of the things is -- and this is important stuff. that most of the structural
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changes on medicare won't take -- we won't get the real savings until the second ten years. the referee in all this stuff is the cbo, which says we're only going to count things in the ten years. a technicality. it's an important technicality when you say what's going to count and not count. the thing that i think the president is asking, i get this as well. here's this menu, nobody wants to go first in terms of offending folks. so i would argue the president's kind of offended folks by laying out where he wants on revenues. let's have the republicans who want to make changes on medicare who's saying here's off of that list. >> what about things like means testing. >> i think the thing, like means testing, makes a lot of sense. the challenge is that means testing, which i think most of us all agree, makes sense on social security. folks like me should pay a little bit more under medicare co-pays or whatever, but it only generates over ten years about $60 billion. when the reality of the rhetoric hits the numbers, i've been obsessed about this to the point other senators run the other way
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when they see me coming. but we've got to get it done. we can get it done. and the thing that we have to realize is, and this will be for all of your viewers, when a deal's announced, if the left and the right aren't angry, there's not a real deal. >> what about if it's less than $4 trillion? we think that's a -- >> $4 trillion, there will be a down payment. they'll have to be to get tax reform, to get entitlement reform, additional process to fill in. but if there's not a requirement to fill that in, and then consequences, a trigger or a default mechanism and not something crazy, but something we could actually live with, and i've got specific ideas there, then you know it's not real. >> you're the first person who's come on this morning and said as i regard someone who speaks to ceos is, which is, you have some of this, some of that, rise above. we could have aggressive growth. we could take over the world in terms of world leadership.
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you're the first one to mention, we could have a boon here. >> the australian prime minister, good guy, said when america is one relatively small deal away from economic preeminence for the next 60 years. when our allies are saying, here's what we ought to do, i think everybody in business realizes, you give us that certainty, we can plan to any budget. give us a real budget. but we've got to get this done. what we need to do is that we've had -- and i get politics. but with the president and speaker playing to the base, there's a lot of us here who are, you know, part of the bipartisan coalition, that want to get something done. we've got to be ready to stand up as well, because when the interest groups start having the incoming, when some of the folks up here are saying, hold it, they're raising too much revenues here or there, we in the senate have got to be willing to stand up and accept it. i commend you guys with the rise above, i think part of this whole effort to fix the debt. if we want to get this done,
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aren't willing to say, all right, we'll have some skin in the game, we're not going to get it done. >> radical middle. that's what it comes down to. >> senator, thank you very much for your time today. we appreciate it. >> thank you. >> keep it locked on cnbc all day. mission critical: rise above d.c. jim is heading back up to headquarters for a "mad money" show tonight. you've been working on it all morning. >> yes, it's true. the next hour i'll be joined by former white house chief of staff bill daley. then at noon, brian takes up the seats on capitol hill. their lineup kicks off with patrick mchenry from north carolina. i want to bring in my co-anchors back at the new york stock exchange. >> and jim, it's remarkable to watch the markets, at least in today's sessions, all three major averages are higher. dow higher by 91 points, nasdaq helped by the big mood we're seeing in apple today, up by
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more than 1%. jim, i was talking to edgar denny yesterday on fast, and he said, we have a deal, a fiscal cliff deal, and bob pisani was delivering a talk on the floor. a deal would signal the start of american austerity. what's your take? >> no, we get a deal going, look out above. i think there's lots of ceos i talked to who want so much. they want to bring money back here higher. this is the cheapest place to build and hire people in the world. but they're just not sure exactly how much they're going to have to spend because of the government. that's the impediment. these guys want to built here, insource, energy costs really low. it can happen. it's huge. >> with that in mind, if we close at these levels, at least in the green, that's five days up, guys. we've not done that since march, which is a -- that's a long time ago. >> i like having becky on "squawk on the street."
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>> i like sitting next to jim. thanks, guys, it's been great. thanks, jim. thanks, guys. >> see you soon. stimulus watch as the fed kicks off a two-day policy meeting. wait until you hear what investors are saying in our latest fed survey. that's next. >> should you keep betting on a recovery in the new year. rbc offers the 2013 housing outlook when "squawk on the street" returns. well, if it isn't mr. margin. mr. margin? don't be modest, bob. you found a better way to pack a bowling ball. that was ups. and who called ups? you did, bob. i just asked a question. it takes a long time to pack a bowling ball. the last guy pitched more ball packers. but you... you consulted ups. you found a better way. that's logistics. that's margin. find out what else ups knows. i'll do that. you're on a roll. that's funny. i wasn't being funny, bob. i know.
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dow up 92 points. the nasdaq really being helped by the gains we're seeing this morning in shares of apple. the nasdaq is higher by more than 1%. apple computer is up by 2.4 brs. bullish note for the demand for itv due out sometime next year. >> meantime, the fed beginning its final major policy meeting of the year today. cnbc is out with the latest fed survey. the senior economics reporter stee leesman is at headquarters. >> carl, if you could name one reason why the fed will do additional qe and why it's doing it now, why would the reason be? just in general, what's the major goal here? >> to compensate for the fiscal cliff. >> no. >> austerity. >> no. >> low mortgage rates. >> no. what about unemployment?
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>> got him on the third try. >> that's the one that the fed keeps saying, the reason why it's doing qe. we asked our correspondents whether or not mr qe would bring down the unemployment rate. guess what they said, no. 59% said, more qe, which the fed is expected to announce tomorrow, will not bring down the unemployment rate. which is really interesting, what will help bring down mortgage rates, like carl said, yes, what would help lower bond yield, yes, will it cause inflation, no. a little bit closer right there. so just take this in for a second here. it will bring down mortgage rates, it will bring down treasury rates, but it won't lower the unemployment rate. that's a clear sign that what wall street thinks right now is the problem with unemployment is not linked to interest rates. that's not what bernanke thinks, but that's what a majority on wall street believe. take a look here. we're going to show you in a
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little bit, the gdp outlook is lackluster. 2013 keeps coming down, now below 2%. what's the forecast for the market? not much changed from the end of this year. that's about 4% up for next year, no big boom expected in the stock market next year. let's go on and take a look at some other data here. what's the biggest threat to the u.s. economy? slow job growth, 9%. moving on here to the next one, the euro crisis, that's come way down, 11%. the next one is going to be 33%. the winner, the fiscal cliff, 35%. what are people saying about the fiscal cliff? we have people write in, and i believe that's what we'll look at next. we'll look at the probability of a u.s. recession. that has come up. in part because of the fiscal cliff concerns. it was 19% back in march. a high of 36%. so we're halfway between the low and the high pretty much. this is a 13-month high for the probability of recession. now we want to show you what people are saying about the
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fiscal cliff, allowing the economy to go over the cliff would be extremely reckless, says donnelly. they're going out to try to help the unemployment rate. wall street doesn't believe it's going to happen. they do believe it will help lower mortgage rates and the unemployment rate and not a lot of help expected for the stock market. melissa? >> steve, thanks for that. that's interesting stuff there. >> nothing like getting your blood pressure up. liesman testing you live on tv. >> what do you think? wrong, wrong. brought back bad memories, huh, carl? 2013 housing market outlook this morning, according to the report there will be an increase in new residential construction activity, and also recovery in home repair and remodel spending next year. robert, some of the stats are staggering. it's not just an increase in starts, you're looking for 950,000 starts. that would be a 22% increase.
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what's the primary driver of this? is there really that much demand out there for 950,000 new starts? >> we're looking for three things. tighter inventory levels, stable pricing environment, and low interest rates. so collectively, we think these three factors would definitely drive demand verystantially next year. it's been a terrific year for the home builders. we think we're still in the third inning, not the seventh inning. both for fundamentals and the stocks. >> is there a part of the market we'll see the most building? is it the lower end or higher end? take a look at the demographic patterns, household formations depressed since 2007. there's a notion there has to be a catch-up and new households now being formed. if you're to take that piece as going forward, you would think it would be the younger end of the spectrum out there going out there -- >> absolutely. we're comfortable with the thesis that first time home buyers are going back to the market in a very strong way.
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we see a number of stocks doing really well who cater to that market next year, like lennar, hulte, tull will do well and our big cause of the sandskaps will show strength. arizona, california, nevada and florida. it's going to take us out. >> the concern investors might have is the pulte is already up. holmes is also up. what could you say the market is ahead of the recovery and a lot of this is already factored in to where we trade? i know the call i believe is for 30% gain on the home builder stocks over the next year. >> we're definitely comfortable with our call to the upside. and we think the spring selling season will be robust. it's going to beat investor expectations. we think volume sales will definitely come in ahead what the street is looking for right now. we think pricing is going to be much firmer. we look for upward move on kay
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schiller. and gross margin performance will beat street expectations. we're actually very comfortable being up there, if you look at toll numbers, if you look what we're looking for on a forecast for the national association of home builders, if we get to 950, that's going to be terrific. my call is that by the end of '13, our exit rate will be above 1 million. if we get there from a psychological standpoint, huge boost for investors. >> i'm curious about your call on toll and granted. your favorites of lennar, pulte and kd homes. also, they're more towards the high end of the spectrum which is not where you're expecting the biggest growth. >> correct. they dominate the luxury segment. their footprint is washington, d.c., to boston. extremely competent builder. we love the story fundamentally. we think the good news is reflected in the stock. >> a lot of experts say 950 is
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great. it's not average. if you're counting on first time buyers, that means you're counting on mortgage availability. is that going to be -- are they going to be readily available in 2013? first-time buyers. >> there's enough access to credit right now, the bigger threat is what happens in d.c., the fiscal cliff story. the challenge is, changes to tax law that make it more expensive to own a home, could undermine the nation's recovery. that's our primary concern. >> although the mortgage deduction, the mortgage interest deduction is very popular, intellectually it's almost indefensible and abolished elsewhere. maybe the republicans would cut into that, because they want the tax rates to stay where they are on wealthy americans, on a quid pro quo, what does that do for your thesis? >> we're trying to create an incremental buyer who says it's better to own as opposed to ren. anything which creates deterrent to that slows the pace of growth. we're totally comfortable with
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our price targets, upside for the group. all this is subject to change, if we have to revoke or flex down deductibility interest expense. >> if the interest rate deduction were eliminated, what would happen to the forecast of 950? >> absolutely catastrophic. >> meaning what? nothing? >> no, you're going backwards. you're not going forwards. you're going down from, we'll do 780,000 this year, you'll be stuck around 780, or potentially below that. it's a huge deal. >> big difference. >> if it's eliminated or limited or both? >> if you limit it, there's a certain level, we think 750,000 is the magic number. if you flex below that, it becomes problematic and undermines the recovery, both in pace and magnitude. if it's eliminated, that's catastrophic. there's no ifs, buts, or ands around that. >> thank you for joining us. >> thank you very much. >> robert wedenfeld.
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indicating things about the tech giants that might surprise you. stick around and find out what we're talking about. but first, these five ceos have something in common. that might not be a good thing. find out after the break. [ male announcer ] feeling like a shadow of your former self? c'mon, michael! get in the game! [ male announcer ] don't have the hops for hoops with your buddies? lost your appetite for romance? and your mood is on its way down. you might not just be getting older. you might have a treatable condition called low testosterone or low t. millions of men, forty-five or older, may have low t. so talk to your doctor about low t. hey, michael! [ male announcer ] and step out of the shadows. hi! how are you?
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we're seeing a nice gain in the shares of urban outfitters, giving earnings guidance saying so far in the fourth quarter, net sales are in the high single digits. that was better than what analysts were expecting. we're seeing two analysts which have raised their price targets. you've got jenny raising its price tag. goldman sachs initiated coverage of the stock rating it at mutual with a $42 price tag. this is today one of the best performers of the s&p 500. back over to you guys. >> a dow that's up on a monday. take a look at this collection of ceos. you're looking at the five most
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likely ceos to be fired next year, according to our next guest. he's the media director of the good morning to you. >> good morning, simon, how are you? >> i'm concerned about meg. so meg is out of there? talk me through it. steve balmer? you don't think steve gates will fire him, do you? >> i'm not sure what he's thinking. bill gates and balmer are friends, there's loyalty there. but balmer is running a circus at microsoft right now. windows 8 is not anything that he thought it would be. the surface tablet the same thing. i think they have an opportunity at xbox, that they're not taking advantage of. it's a matter of not being aggressive and going with the same old tools and working out of the same old toolbox. i know david is there. the interviews he's done with meg whitman is unbelievable. he asked her how many different ways why are you still in the printing business, meg? she gives the same answer over
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and over again. we need transformational ceos in the tech companies or they'll go by the wayside. >> you cite actually marisa meyer, and the yahoo effect she has by moving over. to that end, talk me through where you are on other companies that might be drawn into that. >> well, i think best buy was the best example. they had the same search firm that was -- you know, that found marisa meyer, or suggested marisa meyer at yahoo!. you've got to give them a lot of credit for making that move. the investors are excited, the stock is up 25% since she took over. now, of course, she has to deliver. but at best buy, they go with hubert jolley. who is this guy? you are in need of a wholesale transformation at a company, you can't think like a retail company anymore. you have to think like a tech company. and you bring in what amounts to a consultant for the business. that's the problem. and shareholders should be
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angry, not just because the stock dropped. yahoo! has been stagnant for a while, and shareholders have been angry there, but at least the board went out and did something. that's what best buy hasn't done. they could have gone that route like yahoo! did, but they refused to, and the results now, it's not there. >> i know this name isn't on your list, rocco, but i wanted to bring jcpenney up. ron johnson you could have argued would have been the ceo to turn the company around. but we've not seen the results. would you consider putting him on this list as well is this. >> i wrote an article earlier in november that criticized ron johnson and his performance. i think what happened there is ron johnson was fantastic at apple. but he worked at apple with steve jobs. ron johnson probably read a few too many of his press clippings. if you watch the investor day he did a few months back when he first came to jcpenney, people
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thought he was crazy when he went to target and went to apple. and then he talks about how he went to steve jobs' house, saying, steve, i'm leaving for jcpenney. and he said, are you crazy? and he's saying, target was great, i went to apple was great and now we're in the same position with jcpenney and i'm going to work the same magic there. no, you can run shotgun with steve jobs all day long. steve jobs was the retail architect. >> we should note, andrew mason isn't on the list either. rocco joining us. >> thank you, guys. >> earlier this hour, you heard democratic senator mark warner's take on the fiscal cliff. now republican senator john barraso is coming up.
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halls of congress all day today as part of our mission critical coverage. this morning chairman kent conrad sat down with becky quick and jim cramer. let's hear what he had to say about reaching a deal. >> we are on the cusp of having the possibility of doing the big deal, because if we took the president's revenue, we took the republicans' spending cuts, and we put them together, we'd have
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a package of more than $4 trillion. >> senator john barrasso from wyoming, the fourth ranking republican in the senate, joins us this morning from capitol hill. senator, good to see you again. good morning. >> good to be with you. thanks, carl. >> a lot going on. the journal says the talks are progressing steadily. there's a moratorium supposedly on public comments. the dow is up almost 90 points. are we getting closer? >> well, i believe we are. and we need to. i agree with kent conrad, we need to do a big deal that takes a look at the spending which to me is the key problem in this country. with 10,000 baby boomers every day turning 65, the tidal waves of those folks on medicare and social security, are really the problem of the $16 trillion debt. it's not that we're taxed too little, it's that we continue to spend too much. >> michael gursen in the "washington post" this morning is talking about where the responsibility lies for the president himself. his argument is, he's got to provide a way for boehner to
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land this deal safely. he writes, the moment boehner concedes on rates, republicans fear a leak and a democratic victory dance, before any serious outcome on spending cuts can be locked in. a, are you willing to move on rates, and b, how do you guarantee those cuts will come in return? >> well, i think michael gerson is right in the sense that you have to have something that john boehner will take to the house, and then can pass the house of representatives, that the president agrees to sign. whatever that is, carl, i believe that will pass the senate. so that's the fundamental decision and discussions that have to be done between john boehner and the president to come up with a big solution that deals with the amount of spending that we have on social security and on medicare, before john boehner says anything in terms of raising taxes through rates. the issue is, john boehner has already put revenue on the table through other ways to do it rather than raising rates, and i
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believe those other ways are better ways to go. >> so, senator, how difficult is the debt ceiling discussion? it's quite clear that the president would like to bolt that on to any deal. and yet, for rank and file gop, to lose control of setting the ceiling on the debt is a huge issue. can it be sold, could it be sold by boehner to the party? >> you know, the president, when he was in the senate, voted against raising the debt ceiling and said to do so would be irresponsible to raise the debt ceiling. now the president is asking for a new credit card after he's maxed out the old one. the constitution, you know, article 1, section 8, says it is the congress who will decide on borrowing money for the country. so i do not see the congress in any way giving up its authority to the president to be able to in an unauthorized, unchecked way, raise the debt ceiling. >> then you are deadlocked. the president has been
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absolutely cat goric that he will not move forward without getting that in the bag. you're saying it's a nonstarter? >> the congress is not going to give authority to the white house for raising the debt ceiling, unauthorized, unapproved without the oversight that is demanded. and the president himself, when he was in the senate, opposed giving that authority to the white house. >> mark warner was on earlier this morning and said, if we go that route, senator, we're going to have this sort of lurching drama every 12 months, every 16 months, whenever the ceilings come up, and those are like speed bumps on the economy. fair or not? >> well, i visited with senator warner last night. we work closely together, working on different issues together. he's very thoughtful. to me, though, the debt ceiling is something that the american people want direct input into that, through the congress, and the president has shown in the past he has no appetite to
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control spending. even the original proposal that came forth by secretary geithner called for -- last week called for additional so-called stimulus spending. our problem is that we are spending too much already, and our solution is to get more people to work, to get jobs and growth. that's the way to increase tax revenue in the country. i think it's a mistake for the president to be asking for unlimited, unauthorized opportunity to raise the debt ceiling, and then just to spend more taxpayer moneys. taxpayers believe that the additional money that they would spend would be wasted because government does a pretty good job of wasting taxpayer money right now. >> they do tend to take it in and spend it right away. senator, good to have your insight today. thank you for being with us. >> thanks, carl, for having me. >> meantime, in washington today, treasury announcing it has -- >> we're going to actually, before we do that, get to the treasury, we'll talk about apple
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here. up by 2.75%. perhaps not coincidentally a level there, seeing this nice gain. morgan stanley out with a note this morning saying based on a survey of consumer demand for apple tv, there could be an additional $50 billion in revenue next year to apple. apple, along with other tech stocks, outperforming today's session with the nasdaq composite up by 1.25%. >> the treasury announcing today it sold all of its remaining shares in aig for $23 billion. wrapping up the biggest bailout during the financial crisis. mary thompson is back at hq with the details on that. it is a profit of $23 billion? >> yes, a profit. the government is out of aig. the government's sales of the aig stake was one of ben's goals when he took the reins back in
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august of 2009. in a note to employees this morning, he wrote, that today warrants a celebration like no other in aig's history. the closing of this transaction will mark the full resolution of america's financial support of aig. with the profit to taxpayers of $22.7 billion to date. it marks one of the most extraordinary and what many believe the most unlikely turn-arounds in american business history. they sold their remaining 16% stake, over 234 million shares in aig at an average of $32.50 each. a corporate poster child at the financial crisis, aig resuscitated a government bailout by the treasury of $182 billion. the securities lending business and derivatives are nearly bankrupted, the property and casualty giant. as the firm's fourth ceo in two years, ben executed a plan to simplify the firm by key overseas businesses in order to rebay aig's debts. with one of his primary goals
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achieved, the question comes, what will benmosche do next. does he stay? benmosche came out of retirement to run the firm. while he said he'll stay through 2013, you wonder how long through this year. carl, back to you. >> mary, he also thanks americans for the help, which sort of reminds us in a report that he said he would have been liked to be thanked by americans. >> it certainly was a joint effort by the government and aig. so both sides deserve thanks on that. >> yeah. well said. thanks, mary. >> sure. >> when we come back, the fiscal cliff and your money, how to position your portfolio for profit, whether there is a deal or not. "squawk on the street" will be right back. [ male announcer ] when it comes to the financial obstacles military families face, we understand.
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hi. i'm steven ye, located in new york city. i'm annoyed. i'm annoyed with the fiscal cliff. we're looking at not knowing what's going to happen. we fall off this cliff, and everyone gets affected. there's no trickle-down effect, it's more like a slush. we will lose income. the question is, housm income are we going to lose. if we fall off the cliff, the fear is that we fall off the cliff. not slowly glide down the cliff. big government at this point needs to understand that we should be able to trust you to do the right thing. put politics aside. think about us, the people. that's why we have government. fix it. >> all right. we're looking at a triple-digit gain here on the dow at this hour. up 109 points, a game of 13 points there. the nasdaq really the outperformer up by and a
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third points. andy lapierre is managing director with the group. what happens in the next few days will determine whether or not we have a year-end rally. >> we're having a rally already, melissa. absolutely. the market -- the next few days will determine whether the market is correct in its willing suspension of disbelief, or whether in fact we're going to have to take back some of this optimism. >> well, if you believe, chuck, that the markets are rallying in anticipation of a resolution, and the markets have been climbing slowly in anticipation of a resolution, what happens when there is one? >> i think the only thing to worry about is we might get a deal, but the quality of that deal really sustains worries for investors well into early next year. by that, i'm obviously talking about the notion that we might get a deal where republicans are
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essentially forced to cave to the president on revenues. but we don't get much entitlement spending cuts and reforms. and the republicans as a result, you know, refuse to extend the debt ceiling. and we'll hit that debt limit, we're already there, frankly. but we, frankly, can't play games with it much beyond valentine's day. it will be like groundhog day, we'll have six more weeks of bad weather. >> chuck raises an important point here. what a good deal means for the markets. is a good deal effectively going to suck demand out of the economy? because what happens to entitlements presumably will be facing further down the line. immediately you are going to talk about tax cuts in the first paycheck -- i beg your pardon, tax increases in the first paycheck presumably for people earning $250,000 or more. and that's just the start, isn't it, andy? >> i think actually a good deal for the market is a grand bargain of sorts. i don't think it will be $4
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trillion. but $2.5 trillion would be the best outcome for markets. that is less fiscal tightening, which would help the markets in the near term. but i also think that if you think about entitlement savings down the road and having people stay in the work force longer, because it won't be as jen rours a benefits package, i think that's pro-gdp. people will be working longer. that's not sucking something out of the economy. >> chuck, forgive me, but i'm quite concerned that maybe the market has lost sight of what the underlying state of the economy may be here. goldman sachs, as a result of its financial services conference, they say clarity around the fiscal cliff may help with the margin. but there's no pentup demand that would aid growth next year. chuck, is goldman sachs right? are those attendees of that banking conference correct? >> wouldn't that be interesting if in fact, simon, we rally past the fiscal cliff. we get a deal that somehow buys
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a new market, and then get into early next year and realize that the economy was weakening on its own. of course, we are going to get at least some gdp hit already, because we're probably still unlikely to see an extension of the payroll tax relief. so that would be really funny if after all of this, the correct position was to have bought stocks and held them through the second half, and to sell into a rally after a very weak fiscal cliff deal. >> the health care, let's remember, the health care is on the way whether we like them or not. people will be paying more come january the 1st, chuck. >> there's no question about it, simon. but again, there's still -- we can't lose sight of the fact that this is delicate, this last bit of negotiation. if what andy is talking about to happen, a grand bargain, it's very delicate to put that together in a way that doesn't disappoint liberals too much in the house or conservatives too
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much in the house, we could still have a t.a.r.p. moment there. i think andy agrees with that. >> absolutely. it's tough to get that balance, where you get roughly half of republicans and half of democrats to vote for a deal like that. >> chuck and andy, thank you. >> thank you. delta airlines is buying a 49% stake of virgin atlantic. it has huge implications for the power base within airlines, particularly overseas.obviously transatlantic flights and the feeders on the east coast. delta ceo will join us live at 11:40 to give us his take on the deal and what it means for the future of those airlines and more. "squawk on the street" will be right back. if congress fails to extend the payroll tax cut this will result in an $85 billion revenue increase for the federal government over fiscal year 2013.
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we have a complicating factor for the markets. the greek debt buyback ended at 5:00 a.m. we're getting detailed it may have fallen short albeit by a small margin of what the rest of europe was asking of athens.
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it therefore complicates whether they're going to get their cash. finance ministers will discuss it tuesday evening. more on that at the european close. for the moment, rick santelli in chick for the santelli exchange. >> good morning, simon. what an interesting day. what an interesting week in some perverse way, interesting times. let's refer to one program i talked about two weeks ago on the santelli exchange in a segment called tag, you're it again. it is about tag. transactions account guaranteed program. t.a.g. well, bait and switch a common term. the title of this piece is bait and skate. because, once again, the magic number is $250,000. sound familiar? i'll tell you what it means. we have 1.6 trillion in noninterest bearing accounts that the senate wants to put up for a vote on the t.a.g. program
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to extend it two years. yes. to extend it. it was supposed to sunset like many government programs are supposed to sunset. but sun doesn't set sometimes when the government sticks its nose in the capitalist tent. so here's the way i see it. the bait is once again the wealthy, the 250 grand. but the real wealthy skate. yes, they do skate. i'll tell you why. because 250 grand is the limit for most americans in terms of a guarantee by the federal government on their monies. but on these t.a.g. accounts, it is unlimited. now, let's think. money markets. a lot of wealthy, really wealthy put their money in money market accounts which, by the way, also have issues with guarantees. but this one is unlimited. and many would say, well, it isn't really. it isn't really a money market account. where are interest rates right now? how much money do you get in your money market account? it is. so this money guaranteed by the
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u.s. is going to see the wealthy plow their money in these institutions, guaranteed. and who guarantees it? all the other people that aren't necessarily wealthy. so, once again, the faux rich get thrown into the ditch. because the way i see it, whether it's the super wealthy on many levels, and i hope everybody becomes super wealthy. once again being confused with the upper middle class. these issues never go away. here's what i worry. all these big bailouts, we talked about aig today. yeah, it worked out. at what expense? what did we give away? what moral hazards did we create? let's not create another one. if the super wealthy want guarantees, let's not give it to them. let's put it to work the way capital ought to be and create new enterprise. markets going to watching the speaker of the house. john boehner is going to speak from the floor of the house. not a brepresser. with an update on fiscal cliff go negotiations.
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at your local why they have a raise your rate cd. tonight our guest, thomas sargent. nobel laureate in economics, and one of the most cited economists in the world. professor sargent, can you tell me what cd rates will be in two years? no. if he can't, no one can. that's why ally has a raise your rate cd. ally bank. your money needs an ally.
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all right. dow is up triple digits. we're going to have a lot to talk about tonight on "fast." >> mission critical continues at 5:00. also fiscal cliff and munis. could america become a net energy exporter? dennis gartman's thoughts and his take on the run up in prices of copper. the short list of which banks are next besides morgan stanley to pay dividends or buyback. >> see you again tonight. meantime, more of our special coverage of mission critical, the fiscal cliff, live from washington, starts now. america, we're on the edge of the fiscal cliff. billions are at stake. and your money hangs in the balance. while washington quarrels with itself, time is slipping away. the only solution for our government to put differences aside and put real compromise on the table. rise beyond disparity.
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rise past adversity. rise above. this is a cnbc special report. mission critical. rise above dc. >> our special mission critical rise above dc coverage continues right now. all day long we are here in washington holding lawmakers' feet to the fire on the fiscal cliff. here's what we know right now. in terms of some of the moments from this morning, senator mark warner from virginia saying compared to the size of our economy and the drastic steps that have been taken in other countries the current proposals are relatively small and government should just step up and get a deal done. senator bob corker, though, hesitant about signing any deal if there's not some sort of agreement about increasing revenue. he says there's no guarantee enough will be done about entitlements down the road. and as he looks in on the process, grover norquist maintains there's no better reason to raise taxes now than there was in the past. it all gets down to a pretty stiff standoff. carl, we've been watching this this morning.
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we've been saying all day long that this is the time to be optimistic because both camps, the prince pipals on both sides had gone somewhat silent. we had not heard the same posturing, rhetoric thrown out. now we are getting word speaker boehner will be speaking on the house floor at noon about this. carl, if you read the tea leaves here, the people have been saying silence is a good thing. if he's speaking out now, i don't know if that's a good sign or a bad sign. although based on what he was tweeting just about 25 minutes ago, the speaker tweeted, the gop has offered a balanced plan. now the president has to respond with a balanced plan that cuts spending and can pass. maybe that's the most important thing, passing in the house. >> from an optics standpoint, it's going to happen on the floor of the house. as he gavels in the session. it's not going to be in front of reporters who can toss him a curve ball here and there. maybe things are getting delicate enough he wants to do this within the sanctity of the
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new floor. this -- whether it's with warner, with scott garrett today. there is work going on. we just don't know how much. >> reporter: that's absolutely right, carl. a lot of people have been drawing similarities between the current fiscal cliff negotiations and that debt ceiling standoff from last year. so we have one former insider who joins us right now. he's been through this before. he probably knows how to read the signs better than just about anybody out there. bill daley was the white house chief of staff under president obama during the debt ceiling negotiations last year. mr. daley, thank you very much for joining us this morning. >> thanks for having me. >> reporter: we were just trying to figure out what to make of this. all morning long we've been saying it's relatively good news that we haven't within hearing from the principalprincipals. what does it mean now that speaker boehner is going to be
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addressing the house at noon. >> i think it's a strong sign there is movement. i don't know that. i'm not on the inside. i don't know what's going on. i doubt the speaker is going to stand up and speak to the body and say nothing's happening and we're not going anywhere and just give a partisan speech. so i'm hopeful that that's what this means. i think it would be damaging to a process that has been basically as it was in '11, a pretty quiet going process kept in secret if all the sudden this becomes anything but that process. i think a very public negotiation does not help getting this done. in what is a relatively very short period to sort of get this stuff done with the holidays coming upon us. >> that's right. 230 d 20 days until that deadline. there are going to be a lot of days that people aren't in session and aren't working through some of these arenas. >> you'd be surprised, becky, how the smell of air fuel will motivate members to get moving around the holidays. come the 20th, 21st, 22nd, into
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christmas eve, those are great motivators because of family obligations. we hope. >> reporter: bill, the one thing that has surprised me so much is how much has been played out in front of the cameras to this point. how much rhetoric has been out there. it seems to me that that really fires up both parties' bases. and i don't understand how that can be constructive at all. in fact, it seems incredibly detrimental. how do they talk themselves out of the boxes they put themselves in? >> i think it's also a commentary on sort of our politics today and how you govern. in all due respect to the media you demand more of a public process. you demand that whether it's through leaks or through keep pushing your sources as you do. because that's your job. it makes it very difficult. especially the longer this goes on to keep control of these situations. so i would hope that the speaker and the president, who can do this deal, can get back together personally and try to get this thing done. and then as we said in '11, basically everybody in leadership in the congress is
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going to have to hold hands and kind of leap off a ledge having some faith that politically there's a net to catch them all at some point. >> i understand the negotiations behind close ed doors. maybe sometimes that's a good thing. grover norquist was here earlier today. he said he'd like to see cameras let in on the whole process so that nobody can mislead or not do exactly what they're saying behind closed doors as well. is that a good idea or bad idea? >> that's one of the silliest ideas i've ever heard in my life. obviously that's from somebody who doesn't want a deal. no wonder he suggests that. because he doesn't want a deal. >> reporter: his contention is it's worked in florida where they do have sunshine laws. >> great. but i just think that at this stage of a fiscal cliff to go and have a -- what are we going to have? a reality show here? let everybody and their brother show up? we'll have snooki -- >> "jersey shore" all over again. >> "housewives of washington, d.c.." they can come in, too. >> reporter: not a bad idea. >> that's great entertainment.
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but part of our problem with governing today is some people view this as entertainment. there are real people out there that are suffering. there's going to be as you know better than anyone real consequences if this thing doesn't get settled in a very short period. that's not right. this is what people were elected to do. do the hard things. make the tough decisions and move on. the american people want that. >> reporter: bill, we had senator conrad with us earlier today. he suggested along with senators warner and senators corker that if we don't get $4 trillion plus in terms of the total package that's between revenue cuts -- or spending cuts and revenue increases that it's a failure. is that true? if it's not $4 trillion plus should we look at this as -- >> i don't know if you could say it's a failure. obviously it would be -- i think the markets would tell you whether it was -- how disappointing it was. look, any progress is helpful in this situation as you're digging yourself out of this hole. i wouldn't say it's all or nothing. i think if you're not in the range of $4 trillion or more as a total package, and don't forget, there's been substantial
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cuts to the discretionary budget over the next ten years that this congress, republicans and democrats, at the president's direction, led last year. so there's a big down payment. but we've got a long way to go in those cuts. so i think there's a -- no doubt if we don't do $4 trillion or more, which is very difficult, i think the market will not be as enthusiastic. i sure would not be wanting to put a number out there. i don't think it's helpful that somehow there's a failure if a certain number is not reached. i think it's going to be important what the mix is and whether or not at the end of this people have faith that the systems come together. and then we can see growth in our economy. we've got to get growth going. it's not just about solving the problems of the past with deficit. but how do we stimulate and cause some growth here? that's -- everyone watches your shows, that's what they want to know already absolu
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know. >> reporter: absolutely. thank you very much for your team. coming up in the next hour, we are handing the reins over to maria bartiromo. we are expecting word from speaker boehner at the top of the hour. carl, after you heard from mr. daley what do you think? >> i was just tweeting his line about the reality show and the idea of cameras in the room. when you get bill daley making a snooki reference, becky, you know it's a good news day. >> there you go. a lot to come still. a check on the markets. dow currently up 105 points. the best day of the month even though we've only had seven trading days so far. more than that, if we close higher that's five straight for the dow. we've not done that since the middle of march. got to go back to springtime. s&p up 11. nasdaq up 38. goldman meantime initiating coverage of retails today. michael kors, gap. the firm says gap is the
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favorite of the retailers as it sees continued positive brand momentum. then there's dollar general falling after disappointing results for the quarter. its gross margin did come in below expectations. delta air lines making big news today. officially buying a 49% stake in virgin atlantic for $360 million. company is in the middle of a news conference in new york right now. our phil lebeau is there live with the latest. phil? >> carl, as we speak, so is richard branson. he is talking via satellite from somewhere in the caribbean. the press conference taking place in new york city. there's richard anderson who has just taken the podium here in new york city. they're going to be announcing not only the outline of the terms of this deal but a little bit of the philosophy behind why delta is buying this stake. let's take a look at the terms of the deal. delta buying 49% stake in virgin atlantic. basically buying the singapore airline stake. that's $360 million is how much it's costing. the virgin atlantic brand
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remains. that's critical here. just a few minutes ago richard branson said ignore all the speculation that i'm going somewhere. i'm going nowhere. he plans to remain ceo of virgin atlantic. why is delta doing this? this is all about increasing exposure to the london market. specifically the slots at heath row. when you look at all the flights that are going to be added to the delta network through its alliance here with virgin atlantic from the new york market, this is very, very lucrative for delta. particularly when you're talking about the corporate customer. as we take a look at shares of delta, we're not really seeing much reaction to this deal today. in large part because for the most part it was baked in. although a 5% bump is one they'll certainly take at delta. don't forget, we'll talk with richard anderson first on cnbc at 11:40 about a half hour from now, carl. the thing you need to keep in mind about this deal, this is all about keeping that exposure to europe, particularly for the corporate customer. that's the lucrative customer
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they want to court between new york and heathrow. >> high margin business. nice dove tail between that story, phil, and the willie walsh, richard branson knee to the groin as to whether virgin atlantic lasts five years. >> i'm headed over there. i hope somebody asks him about it. >> i'm sure they will. see you in a few minutes. we mentioned dollar general moving lower. that is dragging down some other discount names, too. mandy drury. >> the ceo is making more comments about dollar general this morning saying despite a strong start to the holiday season, he has rarn weekly sales fluctuate as much as they have recently. the cfo, by the way, carl, sayisay ing company will be cutting prices on certain items which has raised some concerns about margins. in fact, it does seem to be putting pressure on competitors like dollar free. you've got family dollar as well moving lower today. electronic retailer best buy, as you can see on the board there, also in the red by nearly 3%.
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coach at the bottom of the board there also just marginally lower. goldman sachs did today resume coverage of the stock slapping wit a rare sell rating on coach with a $58 price tag. that's what we're watching. as we say, retailers on the run. run of the worst performing sectors on the s&p today, carl. back to you. >> mandy, thank you so much. tech companies are holding a lot of cash. that's definitely no secret. but just where is all that cash? you'd be surprised. we're going to tell you after the break. first, rick santelli's working on something for a little bit later in the hour. hey, rick. >> absolutely. and i think what's appropriate on the first day of a two-day fed meeting is to talk to a trader who has an opinion on the fed. we'll be dealing and talking with art nolan at the bottom of the hour. and in his opinion, more financial alchemy on the way. is he right? is he wrong? tune in and find out, bottom of the hour. [ male announcer ] fee a shadow of your former self? c'mon, michael! get in the game! [ male announcer ] don't have the hops for hoops with your buddies?
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it's no secret big tech companies are holding a lot of cash. billions, in fact, most of that cash is sitting outside the united states. jon fortt is live in san jose with more on that story. >> i spent some time searching if latest sec filings to see just how much cash is in overseas bank accounts where it's not subject to u.s. taxes. here's a snapshot. microsoft, 87% of its cash. cisco. oracle at 80%.
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apple at 68%. google at 64%. that's important to note. the reason why these companies have so much cash overseas is that they've been global growth stories. when microsoft sells product overseas the proceeds go into accounts over there. don't come to the u.s. unless microsoft needs to buy something here. you can see it plays out in a company like apple, too, where international launches and international retail expansion have become far more important than the u.s. where growth is concerned. just five years ago apple had 58% of its cash in the u.s. this is actually a big issue for a company like cisco where john chambers has been very straightforward about saying if the federal government lets us repay treeuate this cash, bring it to the u.s. without a big penalty, we'll use it to hire and grow in this country. if not we'll hire less and, by the way, keep making bigger overseas acquisitions, too. all of this gets a bit dicier when you consider a lot of u.s. companies have gotten pretty good at avoiding tax on international sales by using havens like google's bermuda
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subsidiary and amazon's strategy of basing european operations in luxembourg. it raises the possibly a repatriation -- >> they are doing what fiduciaries do. jon fortt in san jose. apple rebounding today. still suffering from a nearly 10% loss over the last two weeks. up next, we'll find out what's next for apple shares and if the stock is a buy here at 549. a little bit later delta ceo richard anderson will join us live to talk about the new stake in virgin atlantic. we're back after a break. she keeps you guessing.
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ameriprise. the strength of a leader in retirement planning. the heart of 10,000 advisors working with you one-to-one. together for your future. ♪ take a look at apple today. managed to get over that hump of 540, 541. currently 548 and change. off its high of 705, of course,
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certainly a topic our capital markets editor gary kaminsky has touched on quite a few times. another go today. >> we are. due to popular demand request let's get right to it. joining me is tom mcclellan, editor of mcclellan report. market newsletter. tom, we showed some charts recently you had sent on to us. so i know you've got a number you want to share with the viewers. let's get right to it and explain why you think this is so relevant to apple today. >> well, the amazing thing is that apple's share price pattern, not the company, but we're talking about the stock price, seems to be replicating the history of what we saw with rca in the 1920s. rca was the giant tech darling of the 1920s. it was putting a radio in every home. it was the leading innovator. it was a great company then and it continued to be a great company afterwards, after it topped in 1929. but the price patterns are nearly a match. what that tells me --
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>> let me jump into that. when we showed this chart you showed some time ago a lot of people wrote in how can you make a comparison to a stock in the 1920s. you had a stock market crash during the period, a number of other things. as a technician how do you sort of correlate between those type of events and the charts of a stock price? >> i get those questions a lot. and people who write to me angry e-mails tell me the two companies are not similar at all. the two times are not similar. i say, yes, that's true. but the patterns are similar. what a stock price pattern tells you is not so much about the company. it tells you about the people that are invested in it and how they are behaving and what the resemblance is saying to us is that the behavior of the investors in rca in the '20s and the behaviors of investors in apple now is almost exactly the same. there's a set of fezziphysics involved in putting in a top.
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>> in terms of the apple/rca comparison you believe that the top in apple has been made? >> i do. we're getting a nice pop that's right on schedule this week. a lot more damage to come next year. it's not going to be a good time for apple, the stock. apple the company is still a great company. they're still innovating, still doing great things, still going to be doing business for a long time to come. apple's share price is falling into the same pattern that we've seen lots of times before. >> you also look at apple/microsoft. what does that chart tell you in terms of, again, the technical read on those two names? >> after looking at the resemblance to rca's share price from the 1920s which i was able to do with some help from the folks at global financial data. they got me the data on rca. we looked back at what the resemblance was to microsoft in 2000 at the top of the tech bubble. we see the same resemblance. right now we're getting that pop on kind of the right shoulder that microsoft had. apple is making a similar pop.
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we have a decline coming ahead according to what microsoft's share price pattern did in 2000. it's following the same dance steps. >> all right. so, i mean, clearly we know what your viewpoint is on apple. while we have you here, tom, in terms of the overall market, equity markets, i know you've been looking i think with euro/similars. give us a sense of what you see for the s&p looking at the charts here. >> 2013 is not going to be a great year. we look at the commitment of traders data for euro/dollar futures. this is not the euro versus the dollars. it's euro dollars, an interest rate product. commercial traders do, that tells us a year ahead of time what fund flows in and out of the stock market are going to look like. we've got a big decline coming up now. another top in may. a giant flushing sound after may and into october of 2013. not going to be a great year. which is not is a surprise in the first year of a new presidential term. it's typically not a good year.
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not like the third year which is always up. but the third year quite often has trouble and things are shaping up for that to happen again this time. >> tom, thank you for your information, for sharing with us. we appreciate it. we'll see you again soon. carl, i must say, you have to always remember the difference between neck echnicals and fundt am ales. tom's got the strong opinion in terms of looking at microsoft and rca. again, it is a technical read. >> apple and rca. different eras, different epics. >> i just went to the apple store over the weekend, upgraded three of my kids' phones to the iphone 5. it's hard to as a consumer, and he said the company is different than the stock price, but, again, it's the type of thing important for viewers to understand. a lot of money moves in and out of names simply based on technical movements. >> it's a great guest. a few moments left in europe's trading day. the close over there. they've had some news.
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whether it's about greek buyback or investor confidence numbers. we'll get that close in 3 1/2 minutes. don't go away. son to discover the kid in all of us. enjoy free shipping and great values on your holiday shopping from l.l. bean. monarch of marketing analysis. with the ability to improve roi through seo all by cob. and from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. i'm going b-i-g. [ male announcer ] good choice business pro. good choice. go national. go like a pro.
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[ male announcer ] good choice business pro. good choice. welcome to the world leader in derivatives. welcome to superderivatives.
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a minute to go until europe's close. simon's here with yet another illustration of the collision between reality and how the market reacts, simon. >> essentially we're trading relatively optimistically into the close in europe. we do have breaking news of what is happening with greece. the buyback has gone through. they've raised over 31 million
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euros -- billion euros at face value. it would appear they had to pay more to get the debt off the u.s. hedge funds and the greek banks and everybody else. therefore they're short by about 450 million euros on their targets. eurozone conference call is about to start with the finance ministers to sort out exactly what they do. in general terms around europe today there is optimism. you'll see that in this close. europe shutting down. >> the european markets are closing now. >> remember yesterday and all that concern we had about where italy might go with the resignation of mario monti. greece is higher. por sh gal is higher. spain is higher. it's a good day for -- investor
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sentiment.strongly it was revealed today. optimism over what the fed is going to do in the united states tomorrow. optimism there will be a deal on the fiscal cliff. you have optimism that the recapitalization of the banks is going to be delayed by another year according to the bank of italy. and you have optimism as well on mar of election promises as we now face the pros wekt of a much earlier election in italy. to that end it is fascinating. sylvia berlusconi has come out today warning about the germano center of politics. in other words, too much of a focus on what is happening from germany and the austerity inspired by angela merkel. in particular, he is drawing
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attention to this. which is the spread of the extra that investors demand to hold italian bonds over german bonds. i've shown this to you a couple times. over the last year it's been a mainstay of a lot of the italian business broadcasts internally. they say our bonds are currently trading so many basis points above the germans on their hourly bulletins. that was one of the reasons why at the height of it berlusconi was kicked out of power. he's saying now this is a total calm. italians essentially should ignore it. he said the spread is a con. back to you, carl. >> he is back. silvio is back. as we head into the final fomc meeting of 2012 fed policymakers have traders on edge. want to get to rick santelli on that in chicago. >> i'm on edge, all right. let's do a summary before i
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bring my guest and friend art nolan in. december 5th you have a 2.86 trillion fed balance sheet. you have 1.65 trillion of treasuries within that. you have 884 billion of mortgage-backed securities. of course, you have an unemployment rate more dramatically affected by beaming the unemployed to mars. but it is just a bit under 8%. why do we have to keep going down this road? why do we need to be printing more? what is the fed accomplishing? and, you know, as you said, where are more leeches? >> the one thing, they do the same thing over and over again. it just doesn't seem to be working. they keep coming into -- with bigger amounts because they have to to have the same effect. they have to come in with more amounts every time. they keep coming in with it. they're already projecting the balance sheet at the end of next year might be 4 trillion. >> let me stop you there. the reason it will probably be 4 trillion and it's kind of been stuck just under 3 trillion for a while is because the
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sterilization of twist ends. >> right. >> why don't we talk about that. >> the market is expecting them to replace big twist, selling of short term securities to buy the long term with an actual bond buying program. >> hence the expansion. >> the expansion. especially since the mortgage back has no limit on it. so the next program -- >> it does have a limit. it has the issuance. that doesn't seem to stop. because many days they have purchased more than a new issue market has created in mortgage backs. >> so the next program will directly add to the mortgage backs additions to the balance sheet. you know, the interesting thing about that is no one's, you know, two years ago we were talking about an exit strategy. no one's talking about an exit strategy now. >> they were running through exercises. let's do a little exercise here. the conventional wisdom is that they'll never sell this balance sheet whether it's close to 3 or close to 4 trillion. just let it run off. okay. what happens when two, three years down the road inflation starts to rear its ugly head? normally you see mad sells.
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pulling money out. does that force an exit? >> i wonder if we're going to have to wait that many years. at some point if you get any inflation what tools -- ben bernanke has said many times they have the tools necessary to do this. i don't know what those tools are. if you can't -- if you don't want to sell your balance sheet where are you going to go with it? >> the irony here is interest rates probably would have been low anyway due to the uncertainty in the world. europe. our fiscal cliff. now with this position, they have an unwinding issue. so the saga continues. carl, back to you. >> all right. rick, thank you so much. david faber has joined me here onset with breaking news as well. >> i want to update people on a story we've been following for a couple of months now. sprint and clearwire. they are moving closer to a deal under which sprint would acquire the roughly 49% of the company it doesn't already own according to people close to the situation. while a tedeal is not imminent e companies are involved in active negotiations and could announce an agreement prior to the end of the year. given the complexity of the relationship between the two companies, the governance agreements, the ownership
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structure, not to mention sprint's pending deal to sell a majority stake to softbank, most sources caution a clearwire acquisition is still fraught with difficulty. in recent days sprint has has significant conversations with a number of clearwires big shareholders. bright house, intel and come cast, owner of nbcuniversal, aimed at purchasing their stock at roughly $3 a share according to people familiar with the conversations. now, the price that sprint would offer for the roughly 488 million shares that are held by the public, well, that remains unclear. while a special committee of directors might agree to a similar price, it remains to be seen whether a tender at that price would succeed. sprint's intention as i previously reported has been to acquire what it doesn't own of clearwire in order to add that company's much-needed spectrum to its own as it embarks on life as a subsidiary of soft bank. soft bank is hoping to close its deal to acquire 70% of sprint by march or april. sources tell me sprint hopes to
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close a deal to buy clearwire simultaneously. hence why they would want to announce something in the not too distant future. the deal would require the consent of soft bank that is to buy clear wire. perhaps more importantly, any deal between sprint and clear wire, well, that would need to be conditional to the closing of the soft bank deal. you don't want sprint out there potentially alone owning clearwire, of course, adding yet another layer of complexity. clearwire which has $5,000 in debt is still in need of liquidity. it did not call its first lien notes yesterday as it might have been expected to do to remain an independent company. any purchase by sprint would dramatically lower clearwire's borrowing costs, something already reflected in the price of bonds. we watch the stock. when it comes to clearwire it's really the bonds that tell much of the story trading well above par. we'll continue to watch this but did want to bring people up to date on what is the very latest. >> is this all meshing the way you thought it would?
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>> it is in many ways. again, it is very complex. it doesn't mean it will necessarily happen. my sources close to this deal, originally it told me it is sprint's intention and hope to buy clearwire. they need spectrum. they want to add all these new features. you need spectrum to do it. which is why you hear pcs as a conversation or other things. clearwire gives them at least spectrum as they continue to have to grow that company with the hope, of course, being they will close the soft bank deal in the first quarter, end of the first quarter next year. >> when you're a man and you want to be number one, you need spectrum. >>bandwidth. pisani is here at post nine. >> the market's acting like there's a deal coming. or it's near. good heavens. we're right at the highs of the day here. we've been moving up. john boehner, speaker of the house, will be talking about 12:00. he's supposed to update us. put up the dow. on the negotiations on the fiscal cliff. obviously optimism is running
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high right now. we're up five days in a row now on the dow jones industrial average. as far as what the markets are doing, we're being led today by tech stocks. apple is having a decent day although it still doesn't have a trading range. at least not in my opinion. it's trying to trade between 500 and $600. i don't know which way it's going to go. texas instruments having a very good day. rauzed their fourth quarter outlook. they're getting out of the mobile chip market. altera is okay. two sectors having a big day. defense stocks, number one. who would have thought? what sequestration worries are there? this is a historic high. the philadelphia defense index, the main index everyone watches in defense stocks, historic high today. all the big name defense stocks are to the upside. raytheon, northrop, rockwell. all are up and outperforming the market this month. who would have thunk it? say what you will. these stocks are having big worries on sequestration.
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put up my two main points and i'll tell you what i think is going on here. even though the threat is looming here they're ignoring it. i think regardless. everything i read indicates there's budget uncertainty and slower bookings comes from all the defense names. frankly them trading at a slight premium to the market now strikes me as a bit odd. nonetheless, that's what's going on. let me also mention the airlines. because the airline index is hitting a 52-week high today. there is some general optimism. delta, there's actual deals. kell t delta is buying into southwest. 49% stake from singapore. good commerce from some of the airlines recently. let me show you what i think is happening. more consolidation coming here. we're talking about some of the deals here with lcc making an offer to amr's creditors. that could be a big factor. there's more consolidation coming. the booking trends have improved recently. as for hurricane sandy, very minimal impact. finally, delta and southwest are hosting an investor day conference this week. a lot of people are expecting some fairly optimistic
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commentary from them. the airlines, business bookings are looking pretty good. add airlines to housing as well as what's going on with autos as industries that are showing some signs of improvement right now. >> absolutely. you mentioned boehner speaking at the top of the hour. in the past few moments the obama 2012 campaign staff has tweeted the following. if your taxes go up, republicans will have made a conscious choice to let that happen. we have no way of knowing if this is somehow related to what the speaker may say in 20 minutes' time. might just be yet another echo of an existing talking point. that's going to be one more tea leaf to read in the next half hour. when we come back, delta air lines buying a 49% stake in virgin atlantic today. we'll talk to the ceo about the deal and what it means for the airline's future after the break. again? it's embarrassing it's embarrassing! we can see you carl. we can totally see you. come on you're better than this...all that prowling around. yeah, you're the king of the jungle. have you thought about going vegan carl?
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but i'm still stubbed up. [ male announcer ] truth is, nyquil doesn't unstuff your nose. what? [ male announcer ] alka-seltzer plus liquid gels speeds relief to your worst cold symptoms plus has a decongestant for your stuffy nose. thanks. that's the cold truth! you know it can be hard to lbreathe, and how that feels.e, thanks. copd includes chronic bronchitis and emphysema. spiriva helps control my copd symptoms by keeping my airways open for 24 hours. plus, it reduces copd flare-ups. spiriva is the only once-daily inhaled copd maintenance treatment that does both. spiriva handihaler tiotropium bromide inhalation powder does not replace fast-acting inhalers for sudden symptoms. tell your doctor if you have kidney problems, glaucoma, trouble urinating, or an enlarged prostate. these may worsen with spiriva. discuss all medicines you take, even eye drops. stop taking spiriva and seek immediate medical help if your breathing suddenly worsens, your throat or tongue swells, you get hives,
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vision changes or eye pain, or problems passing urine. other side effects include dry mouth and constipation. nothing can reverse copd. spiriva helps me breathe better. (blowing sound) ask your doctor about spiriva. kochling up on halftime, riding the rally. a top strategist tells us the one thing that has to happen for stocks to rise another 5% by year's end. amazon soar mr amazon soars more than 40% in 2012. buy more or sell? as lawmakers try to rise above should you sell this year's winners ahead of tax changes? trade rs are naming names. >> i love names. meantime delta air lines buying a 49% stake in virgin atlantic looking to increase its exposure in the uk. phil lebeau joins us with the ceo of delta in a first on cnbc
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interview. phil? >> i am joined by richard anderson, ceo of delta. you've just announced the deal with virgin atlantic. this is all about the access to europe and heathrow, correct? >> it's really about the access to the uk/u.s. marketplace. it's by far, by 200%, the largest market between europe and the u.s. and delta's had about an 8% market share. with this transaction, we get to second place with about a quarter of the market. >> a lot of people looked at singapore air when it had 49%, which is what you're buying. they said singapore air never could really maximize the profit potential. what can you do that singapore air could not do? is it about that access between new york and london? >> yes. and it's about geography. singapore is a long way away from london. and the traffic flows between singapore and london are light. a couple hundred people a day between singapore and london. whereas the traffic flows
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between the u.s. and uk for business travelers represent $2 billion in annual revenue. so it's massive. massively larger, and the geography is a lot closer. >> you're expecting approval perhaps by the middle of next year. once that happens when will you say, okay, let's modify some of the flight schedules in terms of there's 31 daily flights right now for virgin atlantic between europe, the uk and north america. will you modify those to maximize new york and london even more? >> we will do -- we will take steps once we have the appropriate government approval, and we've had implementation of antitrust immunity, you would expect in 2014 that we will begin to maximize the slot portfolio, virgin atlantic and the fantastic brand that sir richard branson has built, to leverage it even more to the u.s. >> i want to talk more about richard branson.
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he made it very clear he's not going anywhere. the brand's not going anywhere. willie walsh has taken to making disparaging remarks. you said during the press conference you're not real keen on what he's been doing. correct? >> i think that's been going on between ba and virgin for a long time. sir richard branson has built a phenomenal pran chfranchise. the key value in the franchise is his leadership and the brand he's built. that's core to what our investment is. we have to have him, the virgin group, and their great product and great employees to be successful in this joint venture. so he is key to the tranks action. >> as you said up there you don't know what the english term is for it, but you have a term in texas for it. >> we do have a term in texas for it. but families watch this show. >> one last question. you're growing your corporate business by about 10%. that's phenomenal growth in this market. are you seeing any slowdown at all in corporate demand for
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flights right now? >> corporate demand is quite strong. you know, when we look at our survey, so we base these on actual data, booking data, unit revenue data, forward looking, plus surveys we do with corporations, and the outlook in 2013 is quite strong. >> richard anderson, ceo of delta on a big day as they buy a 49% stake in virgin atlantic. guys, back to you. >> phil, thank you so much for that. good stuff. when we come back, how does a store specializing in gadgets and gizmos say successful? we'll talk to the ceo about the holiday retail season, consumer and a lot more when we come back. [ male announcer ] at scottrade,
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from hovercrafts to pocket projectors brookstone has quirky gadgets and gizmos. steven bebis is ceo of brookstone. he's letting us know what best selling gadgets will be this holiday season. good morning to you. >> good morning. >> before we get to some of the
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products i want to ask you, it seems like it would be the ultimate in a discretionary item. and that if you were cutting back on a household budget you might cut back on something like this first. is that true? >> not really. because a few things. first of all, we offer great value in our products. so our products last a lifetime. and consumers are cutting back, they think about something that they can enjoy and keep in their family for a long time. our products improve the quality of your life. and so as they stay home, we have wonderful products like our wine aerator. >> i was just going to ask you about that. one of the first things that's on this list for $49.99. what is it exactly? >> yeah. it's -- i'll show it to you right here. you actually put it in the bottle. and you aerate the wine in 30 seconds. right in the bottle. it aerates the wine. you don't have to decant the wine. right in the bottle. reduces the tannins. and you can enjoy wine
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instantly. it's a great item. for a wine connoisseur. >> it says across all prices the aerated wines were found to taste better. i think wine connoisseurs probably agree with. tell me about this hdmi pocket projector. almost 300 bucks. >> $299. fits in the palm of your hand. you can connect it to any smartphone. ipad device. you can watch a h definition movie with a 50-inch -- 50 to 60-inch screen on the wall. and it's rechargeable. and so you can actually watch a full length movie without having to plug it in. >> wow. finally, the max 2 dual node percussion massager. you have to have a massager if you're talking brookstone, right? >> exactly. we're known for massage. we have great products. what better product to get someone for the holiday. something they can use every day in their home to improve the
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quality of their life and improve their health. it's an amazing, amazing device. >> you ever -- >> this one's cordless, in fact. >> before i let you go, you ever done any studies as to the ratio of people who come in to browse, try something out and actually buy something? >> it's very high. i mean, it's very exciting interactive store. you come in, try the products. you can actually demonstrate them and see how you like them. so we have a very high conversion rate. >> stephen bebis of brockstone in newton, massachusetts. happy holidays. thanks so much. >> thanks for having me on the show, carl. thank you. a quick check of the markets before we go to break. dow is up 114. again, five days straight. we haven't done that since the springtime. talk more about it in a second. by the way, up next, four years ago today bernie madoff was arrested for running the biggest ponzi scheme in u.s. history. are we any safer today? we'll talk about it after a quick break. ups store. that's right. i've learned the only way to get a holiday deal is to camp out. you know we've been open all night.
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want to take you to lansing, michigan. this video shot a few moments ago where the state legislature is considering making michigan the 24th right to work state. basically restricting unions in what is obviously a stronghold
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of organized labor. this is the scene outside the capitol which has already been closed because it was filled to capacity. an estimated 10,000 people demonstrating outside where it's about 25 degrees. also several school districts in michigan have been closed as the teachers there have gone to lansing to join the rallies. quite a scene today in michigan. meantime, time for a capital markets op-ed. gary, we mentioned madoff. it's hard to believe it's been four years. >> as a matter of fact, david and i were just talking about it offset. it was 3:00 four years ago today. i got a phone call. you're not going to believe this. they finally got madoff. faber and i had been chatting about it probably for close to a decade. remember, within the industry, the numbers, the performance, this was something that wasn't unknown. but just people were shocked. again, that day that four years ago, david, can you believe it? no, we can't believe it. finally nailed him. here's the thing. madoff won't happen again for the following reason. investors are smarter now.
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whereas the assumption that you could generate a 1% every month, be up 1% no matter what else was happening, even if there is somebody out there with a black box that can do it which i don't think there is, nobody will ever just take it for granted as a result of what happened with madoff. the other thing, too, anybody who has money in a fund, they're no longer since madoff going to allow that money to just sit there. they'll use custodial accounts, avd/dvp. assets directly at that fund. if they do, shame on them. >> cover in the journal is about financial advisers who cannot get their clients to buy stocks. they site the facebook ipo. i don't know if they cite madoff in particular. do you think it had a dulling effect on enthusiasm even to today? >> it did. but remember that also happened at the time when the market hit the lows. we talked about it yesterday. cited many of the reasons why many think the stock market will go higher. you pointed out the


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